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TMI Blog1965 (4) TMI 22X X X X Extracts X X X X X X X X Extracts X X X X ..... on the basis of the deed made on November 20, 1950, for the assessment year 1953-54 and/or 1954-55 ?" The relevant facts are these. The respondent, M/s. Shah Jethaji Phulchand, hereinafter called " the assessee ", is a firm constituted by a partnership deed dated November 20, 1950. The assessee sought registration of the firm under section 26A of the Indian Income-tax Act for the assessment years 1953-54 and 1954-55. The deed of partnership was entered into between five parties : (1) Nathmul Jethaji, (2) Phulchand, (3) S. Babulal, minor son of Jethaji, (4) Sakalchand Thikmaji and (5) Jethibai. The relevant clauses of the agreement on which the learned counsel have made comments are these : " 3. Whereas the above 5 parties have agreed to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... date and the same shall be in existence for such periods as the parties desire. The partnership shall be terminated at the will of any of the partners. (5) That the partners shall have a right to borrow any money required for partnership business at prevailing rate of interest. (9) That the profits and loss of the company shall be shared by the partners in the following proportions irrespective of the contribution of the capital. Ist party shall be entitled to Rs. 0-3-6 IInd party shall be entitled to Rs. 0-3-0 IIIrd party shall be entitled to Rs. 0-3-3 IVth party shall be entitled to Rs. 0-3-0 Vth party shall be entitled to Rs. 0-3-3 Half an anna of the profits shall be credited to the Charity Fund. The portion of loss to b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bunal, by one order, disposed of the two appeals relating to both the assessment years. Relying on Jakka Devayya and Sons v. Commissioner of Income-tax, it held that the minor could be regarded as only having been admitted to the benefits of partnership. The High Court, on reference, as already stated, answered the question in favour of the assessee. We have just delivered judgment in Commissioner of Income-tax v. Shah Mohandas Sadhuram. In that case we have held that a partnership deed must be construed reasonably and that a guardian is entitled to do all things necessary for effectuating the conferment of the benefits of partnership. The question then arises whether the deed makes the minor a full partner or he has been admitted only ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... section 30 of the Partnership Act. Sub-clause (5) which enables partners to borrow money obviously has to be read along with sub-clause (16) by which only the three major partners have been designated as working partners. It seems to us that the minor has not been made a full partner but has only been given the benefits of partnership. But the final objection of Mr. Karkhanis requires serious consideration. He says that the guardian has by clause 3 and sub-clause 4(1) purported, to agree to the starting of business and the constitution of a firm. This, according to him, he was not entitled to do and clauses 3 and 4(1) are void. The learned counsel for the respondent tried to sustain these clauses on the ground that the guardian must be d ..... X X X X Extracts X X X X X X X X Extracts X X X X
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